Nadlique’s problems with having cash on hand

I actually have a big problem with leaving too much resources in the form of cash in my bank account. The problem is, I tend to overspend. Also, I’m not really good at sticking to a budget. I often use budgets to project my spending but when it comes to actually adhering to it, I’m hopeless.

I have been thinking to myself, how do I deal with this problem?

Well, perhaps the notion of “Asset Rich and Cash Poor” is not so bad at all.

One way that I have thought about is freezing my money. What I mean by that is probably by way of converting cash into something else. Converting the cash into cold hard assets.

First thing that I need to consider is by having enough money in my emergency account and enough money to cover my monthly expenses. Then all my other/extra savings need to be converted into assets quickly. Some options are:

1. ASB or Tabung Haji or Fixed Deposit Accounts (i.e. hard to reach places)
2. Buy mutual funds/unit trust
3. Buy stocks
4. Buy investment properties (mortgage on my property = forced saving)

In other words, I want to try to have as little “liquid cash” as possible. I’m just too afraid of spending it all if I have access to it 24/7.

Personally, I think that being “Asset Rich and Cash Poor” is better than having too much cash on hand and end up with spending it all. But really, I think this applies to the early stages of my financial freedom journey. Perhaps, when I am indeed financially free in the future, I can be a tad more extravagant in my spending.

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Who’s richer? Siapa lagi kaya? Part 2

Part 1 is located here.

Now, consider this:

You earn a salary of $10,000 per month and your expenses amount to $9,900 per month. You live an extravagant lifestyle, accompanying yourself with a the latest gadgets and machines, expensive cars, and etc.

Your friend earns a salary of $2,000 per month and his expenses amount to $1,500 per month. He lives a modest lifestyle.

Assume also that other things remain constant (ceteris paribus).

Now, the big question. Who’s better off?

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Who’s richer? Siapa lagi kaya? Part 1

Here’s something to think about.

Consider this:

You own a one-billion-dollar asset, fully financed by the bank. i.e. you took a loan of $1 billion, thus owing $1 billion.

The homeless person you usually see on the streets has no assets at all and has no debts.

Assume also that other things remain constant (ceteris paribus).

Now, the question is, who’s richer?

[Read more…]

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